Talks of Chinese buy-in of GSIS bank may be done by next week

(Update) MANILA, Philippines - Negotiations involving a Chinese lender’s acquisition of a stake in a pension fund’s thrift bank may be completed as early as next week, an official privy to the talks said. Although he declined to discuss the transaction, Winston Garcia, President and general manager of the Government Service and Insurance System (GSIS) said that talks should be finished by next week. Earlier, it was reported that the Industrial Commercial Bank of China (ICBC) intended to acquire GSIS Family Bank (GFB), a subsidiary of the Government Service Insurance System (GSIS), through a capital infusion, Trade Secretary Peter B. Favila said in a press briefing on Tuesday. In a statement, GFB said that while the terms of the investment have yet to be finalized, the partnership is expected to be forged within a year. Besides helping the GSIS Family Bank boost its capital, it will also be able to secure a commercial banking license, allowing it to manage foreign currency deposits units, trust, and quasi-banking functions. GSIS earlier expressed its intent to sell 42 percent of its 99.55 percent stake in GSIS Family Bank. “The investment of ICBC will not only provide the GFB with a very strong financial base, but also signify ICBC’s confidence in the Philippine banking and financial system, as well as the whole economy," GSIS president and general manager Winston F. Garcia said in a separate report. Next: Chinese lender seeks tax incentives to open 20 additional banks Chinese lender seeks tax incentives to open 20 additional banks The ICBC is already seeking incentives from the Bangko Sentral ng Pilipinas for its entry as a third-party investor in GSIS Family Bank. The Chinese bank wants to open 20 additional GSIS Family Bank branches and relocate 12 of its existing 22 branches nationwide. The world’s largest bank in terms of market value, ICBC is also on the world’s top ten banks in terms of assets. Its total assets as of 2006 stood at $893 billion. Its market capitalization as of July 2007 stood at $254 billion, and it runs 18,000 branches, including 106 overseas outlets. The Chinese financial services giant has acquired banks in South Africa, Russia, Indonesia, and Macau. It owns nearly eight percent of Seng Heng Bank of Macau, the territory’s largest. GSIS Family Bank, on the other hand, resulted from the union of several small banks, including Com-Savings Bank and Royal Savings Bank with branches mostly in Cavite, Laguna, and Rizal. Finance Secretary Margarito B. Teves is hopeful the ICBC-GSIS Family Bank partnership proceeds to further boost the image of the Philippine banking system amid the global financial crunch. "This will serve as a magnet for other investors to come in," Teves added. By law, foreign banks are allowed to acquire up to 60 percent equity of local lenders. - Anna Barbara L. Lorenzo, GMANews.TV